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In our precedent Accounting, Auditing & Education Committee (AAEC) newsletter, I convinced you that we are the right contact for our clients on the subject of sustainability reporting.
Now that we know what information to report, which standards our clients should comply with and in what format the sustainability reporting must be published, it’s time for us to think about how to help our clients prepare the sustainability report.
Below is a step-by-step guide, based on the European Federation of Accountants and Auditors (EFAA) for SMEs publication.
STEP 1: Determine what is material information
As already seen in a precedent newsletter, the proposal for a CSRD envisages implementing a double materiality, according to which matters are to be classified as significant if they are significant either for business success or from an environmental or social point of view.
The risks of adverse impact may come from the client’s own activities or may be linked to its operations and, where relevant and proportionate, its products, services, and business relationships, including its supply and subcontracting chains.
The severity of such impacts should be judged by their scale and gravity. But this should not lead to undue additional administrative burdens for small and medium-sized companies.
STEP 2: Establish what is relevant – related to the materiality
It is necessary to assess the relevance of the information and, if it is not relevant, explain why it is not. In other words, the client should apply the “comply or explain” principle.
STEP 3: Structure the report
The client should prepare a table of contents and select indicators in accordance with recognized standards. For this step, it’s useful to compare with other non-financial reports.
STEP 4: Request and compile the information
Quantitative and qualitative information for each of the areas of the sustainability report needs to be assembled. It may be necessary to interview to gather qualitative information.
STEP 5: Consolidate and check the information
Assemble the information according to the table of contents and check that the information has been correctly compiled.
STEP 6: Prepare the report
Prepare the report according to the table of contents. An index of information in accordance with any used recognised standards may be included.
Do you now feel ready to help your client report on sustainability information?
Should you ever lose track of the big picture, my colleagues and I from the AGN EMEA Accounting, Auditing & Education Committee (AAEC) will be happy to help and guide you safely through the IFRS and CSR jungle. As a member of AGN International, you can use the AGN AAEC Helpline at any time or contact me by email at carsten.ernst@wirtschaftstreuhand.de or by mobile phone at +49 173 8710322.
 Carsten Ernst Managing Partner at Wirtschafts Treuhand Group, Stuttgart, Germany | – Serves as accounting counsel focused on International Financial Reporting Standards (IFRS) – Provides AGN members with support in the context of specific transactions – University Degree in Business Administration – German Public Auditor and Tax Consultant – Member of the following AGN bodies: EMEA Board of Directors (Vice-Chairman) EMEA AAEC Accounting and Auditing Committee (Chairman) IACC International Auditing and Accounting Committee |